Growth stock
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In finance, Growth Stocks are stocks that appreciate in value and yield a high return on equity (ROE). Analysts compute ROE by taking the company's net income and dividing it by the company's equity. To be classified as a growth stock, analysts expect to see at least 15 percent return on equity.[citation needed] CANSLIM is a method which identifies growth stocks and was created by William O'Neil a stock broker and publisher of Investment Business Daily. [1]
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[edit] Growth vs. Value investing
Since 1982, the growth stocks have beaten value stocks during:[2]
- 1982
- 1985
- 1987
- 1989-91
- 1995-99
- 2007
During the rest of the years, the value stocks have done better. Note that the 5 years preceding the dot com bubble burst, growth stocks did better than value, since then value stocks have generally done better.
Some advisors advise investing half the portfolio using the value approach and other half using the growth approach.[3]
[edit] See also
[edit] Footnotes
- ^ How to Make Money in Stocks: A Winning System in Good Times or Bad by William J. O'Neil, # Publisher: McGraw-Hill Companies, The
- Pub. Date: June 2002
- ISBN 9780071373616
- ^ "TD AMERITRADE: Planning & Retirement > Growth vs. Value: Two Approaches to Stock Investing". planning.tdameritrade.com. http://planning.tdameritrade.com/srl/tda/library_article.jsp?tid=0039&client=tda&catid=000646. Retrieved on 2008-06-13.
- ^ Bernstein - Multi-Style Investing: A Tale Of Two Investment ?Styles?
[edit] External links
- Introduction to Growth Investing
- Ratios converge between growth and value stocks
- How to Find the Ultimate Growth Stock
- DuPont: Despite Earnings Miss, Still a Growth Stock
- The difference between value and growth stocks
[edit] References
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